Justify the Means
Gale, Sarah Fister, PM Network
Social responsibility projects survive the slump, but now they come with some strings attached: accountability and alignment.
With their often-hazy ROI, corporate social responsibility (CSR) projects can be a tempting target for the ax, even in the best of times. So when the recession hit, the assumption was that CSR investments would be the first on the chopping block. Yet these projects are thriving - albeit with a few caveats.
As companies obsess over every expenditure, they're not going to fund some feel-good project just because it's nice or it's the "right" thing to do. CSR projects have to align with the corporate brand and strategy - and there needs to be a way to prove rock-solid results.
"We haven't cut back on CSR since the recession, but we have added accountability," says Jane LazgLn, spokeswoman for Nesdé Waters North America Inc., Greenwich, Connecticut, USA. "Funds have become more precious, so they are given more consideration. When we can define how many people a project touched, we can measure whether that project made a difference."
It might be building schools in impoverished neighborhoods or tapping into technology to decide where to send disaster relief. Chosen properly, CSR projects can help define the brand and foster goodwill. Of the 224 global executives surveyed by IBM, 60 percent said CSR investments were more important in 2009 than the year before.
Media attention, customer support and expectations from clients and stakeholders all contribute to the drive to invest in CSR projects, regardless of the state of the economy.
"In the European Union especially, the triple bottom line - economic, environmental and social aspects - is relevant for markets and customers," says Sara Brandimarti, Milan, Italybased European CSR project manager at TÜV SÜD, a global industrial testing and certification company. "You need to demonstrate that you are a good corporate citizen, particularly if you have higher-priced products."
TÜV SÜD worked with an Italian wool producer over the years to obtain social and environmental ISO certifications. Last year they teamed up again to run a project to reduce carbon dioxide emissions.
Once an organization starts a social responsibility program, it should be very wary about pulling the plug, no matter how dire the economic circumstances.
"CSR is a long-term strategy," Ms. Brandimarti says. "It can't be something you do for one year to demonstrate you are a good company, then quit. You have to create a system for CSR and monitor your progress to ensure you are achieving the goals you set forth."
CSR projects may indeed be even more important now, when so many people are in need of support, says Kishor Chaukar, managing director of Tata Industries Ltd., the management consulting division of business conglomerate Tata, Mumbai, India.
"To withdraw from community projects because of one economic downturn is counter-productive," he says. "It may save you money for that year, but you will lose the public's positive perception of your brand, and their faith in you will be shaken."
Mr. Chaukar serves as chairman of Tata's Council for Community Initiatives. Forty of the company's CEOs use the informal forum to share ideas about how the organization can more effectively invest in society. The idea is to help foster investment ideas across the organization and spur any CEOs who are lagging to get more involved.
All of Tata's more than 100 companies around the world are required to support CSR projects. Each one is expected to report on its CSR projects annually, including a discussion of the long-term benefits to the community. To reinforce the importance of CSR, CEOs and companies are rated on the size and success of these initiatives.
"We expect them to actively contribute to society, but they are free to choose which projects they believe are important to their communities," Mr. …